XAG/USD drops nearly 8% over the week as all eyes fall on $22

  • Silver lost almost 8% in the week, the biggest drop of the year.
  • The greenback is posting its best week since June 2021, with DXY steady at 97.251.
  • XAG/USD is still under downward pressure, and a break below $22.35 would expose $22.00 and beyond.

Silver (XAG/USD) is looking forward to completing its worst week of the year, crashing for six straight days, trading at $22.39 at the time of writing. That said, the white metal is accumulating losses of 7.90% over the week, the largest since November 2021, when it lost 5.90% of its value.

The king dollar is back, gaining 1.70% on the week, the biggest since June 2021

The US dollar is the main gainer of the week. So far, the U.S. dollar index, a gauge of the greenback’s value against a basket of its rivals, is up 1.70% on the week at 97.251. It’s the biggest gain since June 2021 in the week the US central bank’s favorite inflation indicator, personal consumption expenditure (PCE), rose to 4.9%, the highest level reached. since June 1982.

On Friday, the U.S. Bureau of Economic Analysis reported that core personal consumption expenditure (PCE) for December, the Fed’s preferred gauge of inflation, rose 4.9%, or 0.1% from more than expected, and left behind the 4.7% reported in November.

Meanwhile, investors seem to be rebalancing their portfolios after the FOMC monetary policy meeting. Although the monetary policy statement was seen as a “hawkish grip”, the market reaction was nil. However, when Fed Chairman Jerome Powell said at his press conference that “the committee agrees to raise the fed funds rate at the March meeting,” the stock sale began. .

Before Wall Street opened, Minnesota Fed President Neil Kashkari touched the wires. He said the Fed needed to balance the US economy by raising interest rates. Kashkari noted that the central bank is unsure how many increases will take and stressed that the Fed will adjust as more data comes in.

XAG/USD Price Prediction: Technical Outlook

Silver is biased to the downside, although USD bulls are struggling to break an ascending trendline drawn from the December 2021 lows to January lows around the 22.35-50 area $. In the event of a test of the latter, it would send XAG/USD down to the January 7th cycle low at $21.94, followed by the December 2021 lows at $21.42.

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